A political scandal that threatens to bring down Australia's fragile government deepened on Wednesday, with a trade union reporting to police allegations that a lawmaker paid prostitutes with thousands of dollars of union money.
The allegations date back to 2005 and 2007 when Craig Thomson was national secretary of the Health Services Union. They were first raised by a Sydney newspaper in 2009, but police did not investigate at the time because the union, which is aligned with the governing Labor Party, never made a complaint.
On Wednesday, the Health Services Union's executive board voted unanimously to refer the matter to police and cooperate with any investigation of Thomson, who was elected to government in 2007.
A conviction for theft or fraud would force Thomson to quit Parliament and cost Prime Minister Julia Gillard's year-old government its single-seat majority.
With opinion polls showing the government has become deeply unpopular, observers agree that the ruling Labor Party would have little hope of retaining Thomson's seat in a by-election.
Gillard told Parliament on Wednesday that she continued to stand by Thomson. Labor voted down an opposition motion that would have forced Thomson to explain himself to parliament.
Police announced Tuesday that they were investigating the lawmaker on the basis of evidence forwarded by an opposition senator. But prosecutions for crimes such as theft and fraud usually require a complaint from a victim. Thomson has denied any wrongdoing.
Kathy Jackson, who replaced Thomson as the union's national secretary then ordered an audit of its books during his tenure, said police would be given full access to financial records.
"Police are investigating this matter and we are not going to cause any impediment to them and will provide every record that we have available," she told reporters.
She said an audit report represented to the union in 2009 "established a basis for suspecting that there may have been misuse or misappropriation of union funds."
The union had referred its books to an industrial tribunal to investigate, rather than police.
The tribunal's investigation continues, but cannot result in criminal charges.
Asked if she were concerned that the police investigation could spell the end of the Gillard government, Jackson told reporters: "That's a matter for the Labor Party."
"Our first responsibility is to members of the Health Services Union," she said.
Thomson is alleged to have used his union credit card to pay prostitutes at a Sydney brothel thousands of dollars in two transactions in 2005 and 2007.
Thomson has denied the allegation and claimed that an unnamed man took his credit card and forged his signature. Thomson also said that that man had repaid the money.
Police became involved after the opposition forwarded new evidence including a statement from a forensic handwriting expert who said Thomson had probably signed one of the brothel credit card dockets in question.
Thomson stepped down as chairman of a powerful parliamentary committee late Tuesday after police announced their investigation.
"The current circumstances will clearly distract from the important work of the committee," he said in a statement. "I continue to reject claims of wrongdoing."
Under Australia's Constitution, a lawmaker must quit Parliament if he or she is convicted of a crime that carries a potential prison sentence of at least 12 months.